WASHINGTON (AP) - After consulting with economists from across
the political spectrum, President-elect Barack Obama's advisers are
contemplating an economic recovery plan that could cost as much as
$1 trillion over two years.
The figure is far bigger than the $600 billion that Obama's team
A number of economists, including former advisers to Republican
presidential candidate John McCain, have suggested to Obama's team
that the economy needs a much bigger cash infusion, possibly up to
a $1 trillion over two years.
Obama's top economic advisers solicited the opinions as they
worked to assemble a spending plan that would meet Obama's goal of
saving or creating 2.5 million jobs over two years.
Obama advisers say his team has not settled on a figure. But the
advice represents a far bigger sum than his advisers had
Under scenarios envisioned by his economic team, a $600 billion
package would satisfy Obama's jobs goal by the first quarter of
2011, but would leave an unemployment rate of 8 percent two years
Obama's economic team believes that to put unemployment on a
downward trajectory with a goal of 7.5 percent or less over two
years would require a stimulus package of about $850 billion. That
would generate about 3.2 million jobs by the first quarter of 2011.
Obama advisers say they agree with economic forecasts that
predict that without a government infusion, unemployment will rise
above 9 percent and not begin to come down until 2011.
Among those whose opinions Obama advisers sought were Lawrence
B. Lindsey, a top economic adviser to President George W. Bush
during his first term, and Harvard professor Martin Feldstein, an
informal McCain adviser and former chairman of the Council of
Economic Advisors under President Ronald Reagan.
Feldstein recommended a $400 billion investment in one year,
Obama aides said. Lindsey told Obama's team that a package should
be in the range of $800 billion to $1 trillion. The advisers
revealed the discussions on the condition of anonymity because no
decisions had been reached.
"I do recommend $400 billion in year one and expect a similar
amount in year two," Feldstein said in an e-mail message. "The
right amount depends on how it is used."
Obama's team has been spending the past several weeks reviewing
economic data and consulting with experts to arrive at a dollar
figure considered large enough to turn around the sinking economy.
Many economists agree that an infusion of government spending is
critical to get out of a recession.
A stimulus package that approaches $1 trillion, however, could
run into significant Republican opposition in Congress. It also
could cause heartburn for moderate and conservative Democratic
lawmakers, known as Blue Dogs, who are budget hawks and loathe
large budget deficits.
Obama has said he wants Congress to assemble a recovery package
that includes massive spending on highway and bridge repairs and
maintenance, new and upgraded schools, energy-efficient government
buildings and a host of new environmentally friendly technologies.
This week, House Speaker Nancy Pelosi said Democrats are
preparing a recovery bill in the range of $600 billion, blending
immediate steps to counter the slumping economy with longer term
federal spending that encompasses Obama's plan.
(Copyright 2008 by The Associated Press. All Rights Reserved.)